Corporate Sovereignty Provisions Called Into Question Around The World

from the ISDS-is-so-twentieth-century dept

Wed, Mar 26th 2014 12:22am — Glyn Moody

A couple of weeks ago, we noted that Germany just threw a big spanner in the TTIP works by calling for corporate sovereignty provisions to be excluded. Although perhaps the most dramatic repudiation of investor-state dispute settlement (ISDS), it's by no means the only one. Indeed, the tide really seems turning, as country after country calls into question the need to put corporations on the same level as entire nations. For example, according to this report from the Yonhap News Agency, South Korea wants to re-visit the corporate sovereignty chapter in its trade agreement with the US: South Korea plans to hold talks with the United States to rework the investor-state dispute (ISD) clause in their two-year-old free trade pact that has long been cited by critics as being unfair, a government source said Sunday.
That's possible because of the following prescient move by South Korea at the time of the trade agreement's signing: To receive parliamentary approval, Seoul forwarded a proposal to lawmakers that promised a "reevaluation" of the ISD clause down the line.
One country that has already "re-evaluated" ISDS, and found it wanting, is South Africa, as Techdirt explained at the end of last year. But the Lexology site reports that it could soon be joined by another major economy: According to the Netherlands Embassy in Jakarta, Indonesia has informed the Netherlands that it has decided to terminate the Bilateral Investment Treaty between the two nations from 1 July 2015. The Embassy also states that "the Indonesian Government has mentioned it intends to terminate all of its 67 bilateral investment treaties".
Once more, it seems that painful experiences of corporate sovereignty played their part in the decision: it would not be surprising if the Churchill Mining Plc v Indonesia cases (ICSID Cases ARB/12/14 and 12/40) have prompted more sweeping action by the Indonesian Government. Churchill and Planet Mining Pty began arbitration against the Indonesian government in May 2012 at ICSID in Washington. On 24 February 2014 the ICSID Tribunal rejected Indonesia's jurisdictional challenges leaving Churchill free to proceed with a claim for damages of not less than US$1.05bn, excluding interest. This decision has caused outrage in Indonesia.
That outrage is understandable, since it will be the Indonesian public that will have to foot the billion-dollar bill if the ISDS tribunal rules against Indonesia. In a way, the almost unfettered power of corporate sovereignty has become its own worst enemy. The possibility of making claims for billions of dollars has naturally caught the attention of both the public and politicians in the nations affected, prompting many to re-consider the wisdom of agreeing to this kind of one-sided bargain.

If Indonesia does indeed start terminating its 67 bilateral investment treaties, we can expect other countries to take note and consider following suit. One knock-on effect will be that US insistence on putting corporate sovereignty provisions in TPP will begin to look distinctly out of place in a world where prudent nations are starting to move away from them.

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Filed Under: corporate sovereignty, indonesia, isds, south africa, south korea, tafta, tpp, ttip

24 Comments

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Anonymous Coward, 26 Mar 2014 @ 2:06am

Corporate Sovereignty only adds to a nation's debt, and asks ordinary citizens to pay down corporate fines levied against their own government.

Corporations will become worried about governments increasing tax rates on the wealthy, in order to pay down the national debt.

The wealthy will lobby lawmakers to enact austerity/sequester measures, in order to force the general population to pay off the national debt that Corporate Sovereignty helped rack up.

It's basically corporate double dipping. The pubic is charged for everything they purchase from a corporation. Then the pubic is charged again, through taxes and austerity measures, in order to pay back the dispute settlement debts levied against their government.

ISDS is a win-win if your a multinational corporation, and lose-lose for everyone else, including governments. Governments would be wise to view ISDS as a threat to national security, due to the social unrest a ballooning nation debt and draconian austerity measures cutting public welfare programs will cause.

I'm sure multinational corporations are prepared to take that risk. In the long run, even if ISDS crashes and burns entire populations and economies, the corporations will have already cashed out their double-dip profits and they'll just relocate to another part of the world.
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John Royal, 26 Mar 2014 @ 2:22am

TTIP
How can corporations consider themselves as sovereign nations and still be private citizens of other countries. Corporations in any other country on this planet are the tools of man except one The USA Human beings should never ever be tools of corporations that is slavery and as such criminal in nature.
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- Anonymous Coward, 26 Mar 2014 @ 2:32am
  
  Re: TTIP
  Abraham Lincoln would be ashamed of today's system. He didn't gradually free the slaves in his country just for their descendents to end up becoming a new breed of slave.
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  - Mason Wheeler (profile), 26 Mar 2014 @ 11:09am
    
    Re: Re: TTIP
    There's more truth to this than is immediately apparent.
    
    Look back on history, and you see that before the Civil War, the notion of the employer-employee relationship as we know it today barely existed. Large companies didn't hardly exist, because they couldn't; people would work enough to save up enough money to strike out on their own, or go into the family business.
    
    Or, if you lived in the South, you could have slaves. The interesting thing about slavery that no one really mentions today is that it's not "free labor"; slaves were an investment in property that have to be maintained, much like a horse (or a large and complex machine today). You have to feed a slave, provide housing, see to his basic needs, and all that costs a certain amount of money. But it was profitable enough that you got large plantations with large slave-labor forces, whereas in the North, free people who were able to save up money and strike out on their own usually did, and so large businesses didn't have much of a chance to develop.
    
    Everything changed with the 14th Amendment, and ever since then, certain types of employers (and it's very instructive to see how many of them have Southern roots!) have been working to gradually restore status quo ante. Look at how many workers today are paid just barely enough to pay for food, housing and basic needs--exactly what an "employer" of yesteryear would have needed to pay for the upkeep of a slave--while still nominally enjoying a state of freedom, and you'll see how far we've fallen...
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- Anonymous Coward, 26 Mar 2014 @ 3:12am
  
  Re: TTIP
  It's not about corps considering themselves sovereign.
  It's about corporations trying to override or at least bend the actual sovereignty of the signing nations.
  It's about corps trying to put themselves above the concept of sovereignty.
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  - Anonymous Coward, 26 Mar 2014 @ 4:41am
    
    Re: Re: TTIP
    Which Americna administrationa have been doing for at least the last thirty years.
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Anonymous Coward, 26 Mar 2014 @ 2:43am

Corporate + Sovereignty is an absolute no-no
They should be pushed into more accountability and responsability, not less.
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- Anonymous Coward, 26 Mar 2014 @ 5:27am
  
  Re: Corporate + Sovereignty is an absolute no-no
  Unfortunately the US looks determined to go in the exact opposite direction here. With 5 idiots on the court looking likely to say for profit Corporations, a legal entity not a real person, can have religious beliefs and cite religious freedom to avoid following some laws and regulations they don't like based on their 1st amendment freedom of religion rights.
  
  And if the US does it then it'll try to force it onto the rest of the world.
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  - Anonymous Coward, 26 Mar 2014 @ 4:49pm
    
    Re: Re: Corporate + Sovereignty is an absolute no-no
    Soon these corporations will want all employees to join their church and worship at work, off the clock. Oh yeah, and tithing will be automatically deducted from your paycheck.
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    - BernardoVerda (profile), 26 Mar 2014 @ 7:13pm
      
      Re: Re: Re: Corporate + Sovereignty is an absolute no-no
      If? Soon? What makes you think this is in some far-off future?
      
      Here's just the latest pressure point:
      
      NYTimes: Birth Control and a Boss�s Religious Views
      http://www.nytimes.com/2013/09/30/opinion/birth-control-and-a-bosss-religious-views.html
      
      Boston. com: Supreme Court tackles employer birth control coverage under health law
      http://www.boston.com/business/news/2014/03/25/justices-tackle-health-law-birth-control-coverage/ nVy7YoTR1YBH5lVRXpSIvN/story.html
      
      CNSNews: Planned Parenthood: Religious Liberty/Hobby Lobby Suit is About �Taking Away Birth Control� http://www.cnsnews.com/news/article/penny-starr/planned-parenthood-religious-libertyhobby-lobby-suit -about-taking-away
      
      ThinkProgress: Hobby Lobby Wins The Right To Deny Its Workers Birth Control Coverage
      http://thinkprogress.org/health/2013/07/19/2329951/hobby-lobby-birth-control/#
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      - Anonymous Coward, 27 Mar 2014 @ 6:42am
        
        Re: Re: Re: Re: Corporate + Sovereignty is an absolute no-no
        "If? Soon? What makes you think this is in some far-off future?"
        
        Soon .. could mean tomorrow, could mean next year. It certainly does not imply a far off future. Communication requires agreement upon a common understanding of words used. Oh, and I did not the word "if".
        
        The links you provided address a grave issue indeed, however they do not address the American Taliban desire to force employees into worship (of American Taliban Inc).
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Ninja (profile), 26 Mar 2014 @ 3:26am

If you take a moment to analyze those agreements you'll see they largely benefit the huge multi-national corporations. Some of those corporations have become a cancer that plague the world with corruption and wrongdoing in order to secure large profits. I truly hope this is just the beginning of a big push back against those companies and their predatory nature. I'm not against big companies that operate in many countries. I'm against those that abuse their financial power.
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- btrussell (profile), 26 Mar 2014 @ 8:28pm
  
  Re:
  1%'ers own the companies. Everything is done to make them more money. When the company makes more money, it is the 1%'ers raking it in.
  
  Countries can turn this around another way other than flat out refusal. They can counter sue for lost taxes from the corporation as well as all the people they were going to employ for the next two-hundred years or so.
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Anonymous Coward, 26 Mar 2014 @ 5:28am

If corporations are to be considered equivalent to sovereign nations, they would soon develop their own armies and deploy nukes everywhere. What a good idea. If there were conflict between corporations which escalated, how would they target each other, being they are global and all. The destruction would be global. If one were to draw a medical analogy, would corporations be like cancer? And what is the equivalent real world cemo?
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- Pragmatic, 26 Mar 2014 @ 7:23am
  
  Re:
  You don't know how right you are, AC. Remember the East India Company?
  
  While we're discussing this, where are those frantic Libertarian Anarcho-Capitalists when we need them (to bash)? Shouldn't they be in here defending this crap? Also, check this out: http://www.theatlantic.com/magazine/archive/2014/04/in-defense-of-empire/358645/
  
  I think it's our future.
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Anonymous Coward, 26 Mar 2014 @ 5:45am

A way out
Indonesia has a way out:

1. it cancels all these ISDS treaties;
2. it waits for the verdict;
3. it nationalises all assests of the mining company;

Doing exactly that what the treaty wanted to prevent from happening.
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Anonymous Coward, 26 Mar 2014 @ 6:09am

The powers that be don't yet realize that other nations do not agree with ruling a nation as a business as the US has been doing since the 80's ,They prefer a longer lasting Democratic model that can withstand the test of time.
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dave blevins (profile), 26 Mar 2014 @ 6:37am

Biz "rights"
Why give businesses same rights as people when people don't have the same rights as businesses? (and people have lost rights given to biz)
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Anonymous Coward, 26 Mar 2014 @ 10:39am

be honest. the companies that will benefit most are US companies. if there were any other company from any other country, the motions would be dismissed. these ISDS are being put in place simply to prevent any sort of financial crisis from happening to American companies any time in the future. and looking at them logically, what company is going to carry on struggling to make a profit from whatever service or product it puts out when it can accuse a government of preventing it from making money, then go to court? this is nothing but a giant rip off, designed to put countries in debt to the USA in one way or another.
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- John Fenderson (profile), 26 Mar 2014 @ 10:48am
  
  Re:
  Be honest? Who said that the primary beneficiaries wouldn't be US corporations? It's very clear that this is the case. That's the problem.
  
  "this is nothing but a giant rip off, designed to put countries in debt to the USA in one way or another."
  
  To the corporations, not the US. With that correction, I agree with you -- that's another reason these ISDS clauses should go away.
  
  Don't equate US corporations with the US. US corporations wouldn't be any more hesitant to use ISDS clauses against the US than they would against any other nation.
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  - That One Guy (profile), 26 Mar 2014 @ 11:26am
    
    Biting the hand that feeds you
    I'd actually disagree with that somewhat, with the giant companies going after other countries, the USG is able to continue pushing for such clauses as 'good for the economy/US companies', since they aren't the ones who have to justify massive fines to the public.
    
    If a company did the same to the USG though, then suddenly other politicians who were in support or neutral of such clauses would have to justify them to the very public who was about to have to foot the bill, doing massive damages to their chances of getting re-elected, making them much less likely to slip in such clauses in the future.
    
    Mind you, that would require long term planning/thinking, something that those huge companies seem extremely poor at, so it wouldn't surprise me if their greed got the better of them at some point and they did try and shake down the USG, not realizing immediately what they were doing and the likely effects from it.
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    - Anonymous Coward, 26 Mar 2014 @ 6:00pm
      
      Re: Biting the hand that feeds you
      Just ask Antigua what it is like trying to get the US to live up to it's International agreements and trying to get the US to pay when they lose in the WTO court.
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Gerald Robinson (profile), 27 Mar 2014 @ 9:07am

ISPS
Indonesia has started revoking treaties with this clause starting with its treaty with the Netherlands. See the Financial Times article 3/27. Hopefully this will torpedo the TPP and TTIP both of which include really terrible IP provisions which have nothing to do with trade and a bunch of trade provisions far to broad.
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Timmy, 28 Mar 2014 @ 12:47pm

TTIP
Just think..... Federal Reserve.

Back before the crises years, business could run somewhat normally. With the end of the US dollar reserve currency era approaching, in order to keep the fiat ponzi intact for another 'can kicking', whole nations need to be plundered and immediately profited from so the system doesn't implode. If the TTIP passes with the corporation wording intact, it will allow corporations to grab whole years and more worth of profits in one gig, instead of profiting more slowly as in the past. Put another way, now that the dollar is dying, if they didn't make changes to the system like this, we all die just that much sooner.
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